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Job Losses From CAFE Likely To Be Far Lower Than Ford’s CEO Says

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Ford President and CEO Mark Fields reportedly told US President Donald Trump recently that job losses in the US automotive sector could be as high as 1 million if federal Corporate Average Fuel Economy (CAFE) standards are not reduced.

The problem, reports Automotive News, is that the Ford CEO’s claim might be hugely exaggerated. A company spokesperson says that the figure is based on a Center for Automotive Research report published last September, which estimates that CAFE standards could lead to the direct loss of 1.13 million jobs. Critics have said that the study’s findings are inflated.

“It’s a particular case taken with a particular set of assumptions that ends in an extreme result,” says Baum & Associates Principal Alan Baum. Baum & Associates is an auto forecasting firm based in Michigan.

The same Center for Automotive Research study looked at an additional eight other scenarios, AN says, one of which could even result in 144k new jobs being gained as a result of the existing CAFE regulations. It seems Ford’s President and CEO may have cherry-picked the bleakest scenario in order to support his argument. The scenario supposes that gasoline prices will remain around $2.44 per gallon on average in the US, and that the per-unit cost of meeting the regulations would hover around $6,000, all of which would be passed on to consumers.

The EPA projects that per-unit costs could be reduced to between $894 and $1,565 to add the necessary fuel-saving tech. Baum says that much – if not all – of the extra cost could be swallowed by automakers.

“Even in the short term, we don’t think there will be job losses,” International Council on Clean Transportation Senior Fellow John German told AN. “Jobs created by developing the new technology, and money put in the pockets of new consumers, will more than offset any possible impact on manufacturing jobs.”

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— Aaron Brzozowski

Aaron Brzozowski is a writer and motoring enthusiast from Detroit with an affinity for '80s German steel. He is not active on the Twitter these days, but you may send him a courier pigeon.